Hey everyone, it’s Finance Fridays again and I’m going to continue with my series about Cryptocurrency. This is going to be a “Let’s Gamble” segment where I talk about things I wouldn’t normally do, which is speculation. This, at its core, is really just gambling. So without further ado: Let’s Gamble with Cryptocurrency.

Ok, first things first.

This post is mostly meant to be speculative and fun. This is NOT financial or investing advice.

Although I may actually put a little money into cryptocurrency, it will be for the sake of this recurring segment “Let’s Gamble”. I think it will both interesting and fun to follow every few months.

Ok, all that aside, let’s dive in.

As I’ve said before in my prior post about Cryptocurrency, there are more than 900 types of Cryptocurrency nowadays. The prototypical Cryptocurrency was (and still is) Bitcoin.

As of today, 1 Bitcoin is trading at ~ $4850. Note that I didn’t say “is worth” because I think that is the wrong way to look at it.

Cryptocurrency is only worth as much as you can actually sell it for. Just because it’s trading at $4850 today doesn’t mean that’s how much you’ll actually be able to sell it for. The price can fluctuate SIGNIFICANTLY over the course of a few minutes.

Cryptocurrency in general, Bitcoin included, are very volatile forms of investment. Like I said, the highest stakes of gambling. High risk high reward stuff.

Here is my novice analysis of the situation:

In the current cryptocurrency market, there is the reigning champion which is Bitcoin. The “#2 ranker” would be Ethereum.

That is correct in terms of “what they are trading at”. However, if you dig deeper, Bitcoin and Ethereum aren’t really even in the same ring together. Whereas Bitcoin is mostly being utilized as a digital currency, Ethereum has something called “smart contracts” which are powered by its own currency called ether.

The way my simple mind understands it is that Bitcoin is more similar to a “digital US Dollar”, whereas Ethereum would be more similar to Electronic Signature Payment System. For example, it’s kind of like the Certificate-Based Signatures that Adobe Acrobat uses but has its own payment system intertwined. This may be an oversimplification, but that is how I understand it.

So, for this reason, I don’t think Bitcoin and Ethereum are competing with each other.

What does this mean?

Well, it means that if you want, you can buy Bitcoin and Ethereum. Then can both go up (or down), without regard for the other.

This is a different line of thinking than the “One cryptocurrency to rule them all.” that some might believe. I think Bitcoin and Ethereum can (and will) coexist with one another.

As of today, Bitcoin was trading at ~$4850/unit.

As of today, Ethereum was trading at ~$387/unit. (this is Ethereum [ETH] not Ethereum Classic [ETC])

Interesting, but what about the “other ones”?

The other 900 cryptocurrencies? Well, it would impossible to talk about all of them. However, I did want to mention 2 other ones that I find interesting:

Waves is an interesting idea which revolves around being a “multi-purpose exchange platform”. What does that mean? Well, they are trying to link different platforms together to talk to each other, for the purposes of crowd-funding and trading by tokenization.

What I find really interesting is it allows for businesses to create their own cryptocurrency.

It has an interesting concept by being a token that can be exchanged between publishers, advertisers, and users utilizing the Ethereum blockchain. To put it simply, it’s trying to be the currenct that digital advertising will use.

As of today, BAT was trading at ~$0.30/unit.

Ok, so now what?

Well, you pick a horse and see how it does. I personally think there is room in the ecosystem for Ethereum, Waves, and BAT.

I would consider Ethereum to be a relatively safe bet meaning I think the likelihood of it disappear is low.

Waves and BAT are still young upstarts in the cryptocurrency world, but I think their premise is interesting. However, either of them could disappear tomorrow. Also, between Waves and BAT, I think BAT is the highest risk with the highest potential reward. However, it also probably has the highest risk of going belly up.

So then…

As my colleague at work says “No risk. No reward. No Pad Thai.”

The story behind that is he’s a fairly aggressive invester (a gambler) and he bought me Pad Thai one time. I’m trying to convince him to write a guest post about stocks he likes and potentially about his condo he bought during residency (and still rents). I think his guest posts would be very interesting, but we’ll see. Here’s hoping.

All that said, I’m considering taking $1000 of my hard earned money which I saved from Trimming the Fat over the last year (minus all the Legos), and buying Ethereum, Waves, and BAT with a 40/40/20 split. That would buy like ~1 unit of Ethereum, ~69 units of Waves, and ~667 units of BAT.

However, buying cryptocurrency isn’t all that easy. If I do go through with buying Ethereum, Waves, and BAT, I’ll detail how to do it in my next post.

After that I would just do an update once awhile (monthly? quarterly?) on where they are with a little commentary.

I think it would be a fun experiment, what do you guys think?

TL;DR

I don’t think there will be “One Cryptocurrency to Rule Them All”.

I think Ethereum, Waves, and BAT are interesting and can all coexist together.

No risk. No reward. No Pad Thai.

I think it would be a fun experiment, what do you guys think?

Reminder:

This is all completely against The Philosophy. This post is mostly meant to be speculative and fun.

This is NOT financial or investing advice. Only gamble what you are ok losing.

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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About Sensei

A young attending physician trying to navigate the mine field that is life after medical school...